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Millions of Dollars Wasted in Afghan Extractives Program

The Department of Defense (DoD) office responsible for spending $43 million on a gas station and $150 million on luxury villas in Afghanistan might have wasted millions more on failed development projects, according to a new report by the Afghanistan reconstruction watchdog.

Afghanistan has an estimated $1.1 trillion in mineral, oil, and natural gas reserves—collectively referred to as “extractives”—that could potentially generate over $2 billion in annual revenues. This week, the Special Inspector General for Afghanistan Reconstruction (SIGAR) released an audit of the more than $215 million the DoD’s Task Force for Business and Stability Operations spent over five years to help develop Afghanistan’s extractive industries.

SIGAR concluded that the Task Force’s efforts produced “mixed results.” The Task Force left Afghanistan at the end of 2014 with nearly all of its extractive projects incomplete. Of 11 projects, worth a total of $215.4 million, 3 showed little to no achievement of their objectives, while 5 only partially met their objectives. SIGAR found that $54.3 million—over one-quarter of the total spent—was wasted or is at a high risk of being wasted.

For example, the Task Force awarded two contracts to conduct seismic surveys that had to be abandoned due to inclement weather and security concerns. The first was terminated after $4.7 million had been spent and no data had been collected. Ignoring warnings from experts that the project was doomed to failure, the office awarded another contract. The second was terminated after an additional $18.5 million had been spent and only 17 percent of the work completed. SIGAR found that Task Force program managers suppressed negative field reports that might have persuaded superiors to abandon the project sooner.

The $43 million gas station was among the three projects considered to have met objectives. According to the report, the station is operational and serves more than 120 taxis and personal vehicles. If you ignore the grossly inflated price tag, this is one of the few positive achievements uncovered by the audit.

The Task Force shut down at the end of March 2015. During its nine-year existence, it spent hundreds of millions of dollars on economic development projects in Iraq and Afghanistan. So far, DoD has stonewalled SIGAR’s investigations into the Task Force. Principal Deputy Under Secretary of Defense Brian McKeon claims he lacks the “personnel expertise” to answer questions about the defunct office, even though it reported directly to the Office of the Secretary. DoD’s official response to the extractives program audit was to refer SIGAR to a RAND Corporation analysis of the Task Force that does not address any of the issues discussed in the audit.

The heat will be on McKeon next week when he appears before a Senate Armed Services Committee hearing on the Task Force. Sitting next to McKeon at the witness table will be SIGAR chief John Sopko, who is never shy about speaking his mind.

By: Neil Gordon
Investigator, POGO

Neil Gordon, Investigator Neil Gordon is an investigator for the Project On Government Oversight. Neil investigates and maintains POGO's Federal Contractor Misconduct Database.

Topics: Contract Oversight

Related Content: SIGAR, Iraq & Afghanistan Reconstruction Contracts, Wasteful Defense Spending

Authors: Neil Gordon

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